Disney's Shanghai theme park to reopen May 11 with precautions; what about US parks?

Chris Woodyard / USA TODAY

Wednesday

May 6, 2020 at 10:57 AM

The Walt Disney Company didn't offer any new estimate Tuesday as to when it will reopen its U.S. theme parks, but it outlined how its park in Shanghai will be first worldwide park to welcome guests again.

In issuing its financial results for the quarter that ended March 28, Disney showed the degree to which the closures are socking its bottom line. Theme parks took a $1 billion hit on operating income over the quarter.

"Like so many other companies and industries, the pandemic has hit us hard," Executive Chairman Bob Iger said, adding, "I have absolute confidence in our ability to get through this challenging period and recover successfully."

The company's other theme parks in France, Japan and China are also shuttered, though CEO Bob Chapek said Shanghai Disneyland will reopen May 11 with social distancing, masks, temperature scans and other precautions. That head start may provide a blueprint for how to reopen safely while preserving the fun.

In remarks to analysts, reporters and shareholders, Chapek said that guests and workers at Shanghai will both wear masks when that park reopens. However, characters won't, so they will need to keep their distance and won't be dispensing hugs for a while.

He said Shanghai Disneyland has a capacity of 80,000, but that the Chinese government is restricting it to 30%, or 24,000. "We are going to open up far below that to have our training wheels on," he said. In a few weeks, he said the park will ramp up to the new limit.

In order to ensure the park stays below capacity, he said tickets will be good only on a particular day – but he added that he's not sure the same policy will be in effect when the U.S. parks eventually reopen.

The company's chief medical officer, Dr. Pamela Hymel called the Shanghai reopening plans "an encouraging sign for Disney parks and retail locations all over the world" and noted in a Tuesday blog post that she's been working closely with the U.S. Travel Association on a set of guidelines.

She outlined some of the tactics being explored for Walt Disney World and Disneyland, including a phased reopening that calls for opening the retail and dining locations before the parks themselves, as Shanghai has done.

Hymel also warned that the parks will likely have to implement guest capacity measures to comply with state and federal guidelines and noted that they are looking at ways to use the Play Disney Parks app and virtual queues to do so.

The parks have already added hand sanitizing and washing stations during their closures, she said. But upon reopening, they will step up their cleaning and disinfection and employee health and safety training.

Disney isn't the only theme park unwilling to commit to an opening date at this point. Six Flags is paying close attention to Texas, Oklahoma, Georgia, Missouri and Mexico as areas for reopening – with no hard date yet.

"Those would seem to be the areas right now, whereas we're watching the state or the country dynamics that would suggest, ideally, we could open at some point, hopefully in the summer," Michael Spanos, president, CEO and director of Six Flags, said in an earnings call last week. "But again, time will tell."

On March 30, Spanos announced all Six Flags theme parks across the country would suspend operations through mid-May.

As for Disney Cruise Line, Chapek had bad news for cruisers: "That will probably be the last of our travel-oriented businesses to come back online," he said on the earnings call.

But Chapek also said that he expects Disney's cruise business to come back strong, noting the loyalty of cruise enthusiasts. "They trust our business to act in a responsible way...to protect them against some of the woes that have plagued the industry," he said.

Disney's bleak financial results – a 91% decrease in net income from continuing operations during the previous quarter – come as analysts' have issued expectations of a protracted theme-park shutdown, perhaps made worse by any resurgence of COVID-19 as states reopen.

Some don't expect the parks to reopen until 2021, including John Hodulik, managing director of investment research for global financial firm UBS, in a report to investors last month.

"We believe parks' profitability will be impaired for a longer period of time given the lingering effects of the outbreak and now assume an opening date of Jan. 1 as our base case," Hodulik wrote.

Though Disney's devotees are itching to get back to the parks, the company is even more eager to be able to safely reopen. But there seems to be little question about pent-up demand among consumers for vacations and escapism from the current coronavirus myopia.

Southwest Airlines CEO Gary Kelly, in revealing last week that the carrier filled only 6% of the seats on its aircraft in April, cited Disney World as the kind of destination that could be key to a leisure travel revival.

"They need to have something to be able to do when they get there," Kelly said. "So Disney World needs to open back up. Restaurants need to open back up."

United Airlines President Scott Kirby, in a call with investors Friday, also pointed to the famed theme parks in saying the travel business won't pick up until destinations like them are open again.

"Taking my kids to Disneyland is something I do every year, and I love it ... but Disneyland needs to be open."